Shell has announced a final investment decision to double the production capacity of its LNG Canada facility in Kitimat, British Columbia.
The expansion project, known as Phase 2, will solidify the export terminal’s role as a vital hub supplying liquefied natural gas across the Pacific Rim.
The expansion will add two additional processing units, or trains, alongside a second storage tank, a condensate tank, and an additional loading berth.
Once operational in the early 2030s, Phase 2 will boost total production capacity from 14 million tonnes per annum (mtpa) to 28 mtpa.
“LNG Canada is a core part of our Integrated Gas portfolio, helping to supply LNG to customers in Asia at a time when diversity of energy supplies and energy security are increasingly important,” said Cederic Cremers, Shell’s Integrated Gas President.
“Phase 2 supports Shell’s strategic objective to be the world’s leading integrated gas and LNG business by connecting Canadian resources with Shell’s global LNG portfolio, trading capability and customer reach.”
Shell holds a 40 per cent operating stake in the joint venture alongside PETRONAS, which holds 25 per cent, PetroChina and Mitsubishi Corporation, each with 15 per cent, and Korea Gas Corp., with 5 per cent.
Under the venture’s equity lifting structure, Shell will directly receive nearly 6 mtpa of additional LNG from the expansion to trade within its global portfolio.
To support the expanded facility, the 670-kilometre Coastal GasLink pipeline will undergo capacity upgrades, including the construction of five new compressor stations.
Shell expects the investment to deliver double-digit internal rates of return, exceeding its capital allocation hurdle rate while underpinning long-term cash flows.
The expansion capitalises on surging global natural gas demand, which Shell projects will rise by 65 per cent by 2050.
According to International Energy Agency data, power generated from LNG releases approximately 40 per cent lower life-cycle greenhouse gas emissions compared to coal.
